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Boom times for new China, Taiwan players

January 06, 2016 13:00 JST

TAIPEI -- Startups are not only proliferating in China and Taiwan, they are thriving -- some to an astonishing degree. Driving the boom is a combination of an expanding market and favorable fundraising environment.

The ascent for Shanghai-based e-commerce portal operator Bolome has been dizzying. The company is already racking up monthly sales of nearly $8 million less than a year since its foundation. Created by Japanese and Chinese entrepreneurs in February last year, it offers Japanese and South Korean products to Chinese consumers at low prices.

Bolome generated sales of about $1.5 million in August. Just two months later, after China's largest search engine operator, Baidu, and other companies pumped a total of $30 million into the company, Bolome forecast the figure would be five times bigger in December.

Its smartphone app plays videos in which a Bolome "reporter" explains the features of various products and how to use them. Messages from viewers appear along with the videos. The service enables customers to "see products for themselves and buy them at roughly the same prices they would pay at stores in Japan," said Hiroyuki Miura, operating director at Bolome's Japanese unit.

The shopping service, which features about 3,000 items of cosmetics, sweets, health foods and other products, is gaining popularity among Chinese women in their 20s.

Bolome came along at the right time. China's e-commerce market has been swelling at an annual pace of 30% and is on target to hit nearly $590 billion. Venture capital companies poured an estimated $17 billion into China in 2014, over 20 times the amount they sunk into Japan, according to industry sources.

In China, "Wealthy people, such as corporate executives, provide plenty of funds through venture capital companies, making it easier for young people to start businesses and creating a virtuous cycle in which new businesses are created and grow rapidly," said a senior official at an information technology-related company.

Electrifying rise

Along Songshou Road in central Taipei, stores selling brightly colored electric scooters are often packed with young people.

The reason for the flocks of curious shoppers is Gogoro, a startup that has been called "the Tesla of scooters." Adding to the company's appeal is a system it created that enables Gogoro owners to change their batteries at any of about 100 battery stations in the capital. This spares motorists the often time-consuming process of charging their batteries. The company also has an app that lets users check their battery levels on their smartphones.

Gogoro launched full-scale sales of its electric scooters in spring 2015. Sales soared after the company cut prices in October, rising to 700-800 units a month. The bikes are especially popular among people in their 20s and 30s. Taiwan, with its excellent transportation and manufacturing infrastructure, is "a paradise for startups," said Jessica Chuang, public relations manager at Gogoro. She said that in 2016, "we intend to develop European markets that are highly conscious about the environment."

A number of promising startups have emerged in Taiwan in recent years, helped by support from large companies and the government. Many of them have two things in common: the desire to leverage the expertise the island's manufacturers have amassed over the years, and plans to expand into Japan.

Another Taiwanese start-up, Fandora, operates a platform to make character goods -- such as T-shirts -- in cooperation with outside designers and other artists. Fandora handles the manufacturing and marketing and shares the profits with the artists. About 2,000 artists, mostly based in Taiwan, are registered with the company. The company is confident about its marketing approach of using Facebook to find prospective customers interested in specific characters.

Steven Su, Fandora's CEO and co-founder, said in 2016, "we will start a Japanese website and try to find many more Japanese artists."

Also hailing from Taiwan is VoiceTube, which offers an online English-language learning system using videos on YouTube. The company is set to enter the Japanese and other foreign markets in earnest in 2016. "Now 85% of users are from Taiwan, but we would like to enter a new stage, expanding the number of overseas users from Japan, Vietnam and other countries," said Richard Zenn, CEO of VoiceTube.

With its manufacturing savvy, Mooredoll, established by former executives of major electronics manufacturing service companies, is typical of many of the island's startups. The company sells talking dolls designed to promote communication between family members and friends.

Leo Guo, Mooredoll's general manager, said his company's edge lies is having lower production costs and products with far less battery consumption than those of rivals.

Sakura Yang, director of the overseas and industry service division of the Taipei Computer Association, which plans to organize its first startup event in Taipei in May, said, "In Taiwan, where there is a solid infrastructure for manufacturing hardware, venture companies that can capitalize on that strength have big potential to grow."